India planning to scrap $500 million missile deal with Israel

India is reportedly planning to scrap a $500 million deal to purchase Spike anti-tank missiles from Israeli defense contractor Rafael, in what would be New Delhi’s second time abandoning the half-billion dollar arms deal.

The Israeli business daily The Marker on Sunday said Indian officials have requested the Spike missiles produced by government-owned Rafael Advanced Defense Systems undergo additional testing next year, saying the weapon’s infrared system has failed to withstand high temperatures in previous rounds of testing. The Indian military is reportedly concerned about the missiles’ performance in hot, desert conditions.

On Thursday, an Indian government official told the My Nation Indian news website that the defense establishment was planning to back out of the deal with Rafael in favor of developing missiles domestically.

The official said development of the Man Portable Anti Tank Guide Missile (MP-ATGM) was progressing “very fast,” would enter its second stage of testing soon.

He said the government’s Defense Research and Development Organization could deliver thousands MP-ATGMs in two or three years, the same amount of time he said it would take Raphael to fulfill the same order.

According to the Marker, Israeli officials have interpreted the request as a sign that New Delhi is looking for a way out of the approximately half-billion-dollar deal that is seen as a major milestone in relations between the two countries.

The deal was initially struck in 2014, and Rafael Advanced Defense Systems had begun preparations to fulfill the order of 8,000 Spike missiles. Last August, it opened a production facility in India with its local partner, the Kalyani Group, in accordance with the government’s requirements that the weapon be “made in India.”

Three months later, India pulled out of the deal, reportedly in favor of producing an anti-tank missile domestically. Indian media reports at the time said the reversal was made to protect the government’s DRDO, which was developing its own version of the missile.

But in January, during an official visit to India that sought to foster closer economic ties, Prime Minister Benjamin Netanyahu said Narendra Modi’s government was “reauthorizing the Spike deal.”

According to Indian media, Modi’s government scaled down the order and awarded part of the contract, 5,000 missiles, to domestic manufacturers, and the remaining 3,000 missiles to the Raphael-Kalyani facility.

India, which has longstanding territorial disputes with neighbors China and Pakistan, has signed several big-ticket defense deals since Modi came to power in 2014.

It has been moving away from relying on traditional ally Russia for military hardware, and has deepened its ties to Israel, diplomatically and militarily.

Israel and India trade some $5 billion annually, with the majority of the deals in arms and diamonds.

Last year, Israel and India signed a $2 billion military arms deal, which includes the supply over several years of medium-range surface-to-air missiles, launchers, and communications technology.

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